Clinton Between a Budget and a Hard Place as Decision Time Looms on the Economy : Policy: The President-elect has been putting off the tough choices. But inaugural may pass before he pulls his program together.

Two months after his election as President, Bill Clinton has finally reached the point in the transition process that aides say he likes the least: making policy decisions that may be politically unpalatable.

With his inauguration looming and the beginning of his Administration just two weeks away, Clinton has put off making many of the tough choices that will be necessary before he can pull together his economic agenda while also addressing the worsening budget deficit.

In fact, after initially pledging to have his economic program ready to be reviewed by Congress by early January, it now appears clear that it may not be finished until well after he takes office.

A key test of how quickly the Clinton team can get moving may come Thursday in Little Rock, Ark., when the President-elect meets with his top economic advisers as a group for the first time since many of them were appointed.

The fact that Clinton is only now convening the first meeting of the economic team was described Tuesday by some aides as indicative that his promised “laser-like” focus on economic issues has been somewhat diffused.

No final decisions on the shape of Clinton’s economic plan are expected to be made Thursday. Still, the session will be significant, sources said, because it marks the first time that Clinton and his senior advisers will go over in detail the range of options open to the President-elect.

The meeting also is designed to serve as a model for the way in which economic policy meetings will occur in the Clinton Administration, sources said. Robert E. Rubin, slated to become assistant to the President for economic policy and the head of Clinton’s Economic Security Council, will chair the meeting, as he will in Administration policy conferences. But he is expected to act as a mediator rather than as an advocate, counting on others in the session to provide Clinton with analyses of the range of policy options facing him.

Clinton and his advisers are expected to be confronted with new and more daunting budget numbers that seem likely to constrain the new President’s ability to follow through on many of his campaign promises.

Sources said that the decision-making process has been complicated by new projections, both from the Bush Administration and the Congressional Budget Office, showing that the budget deficit will be much worse in coming years than had been expected.

The Bush Administration is scheduled to release its last budget today. Sources said that the document forecasts that the deficit will exceed $300 billion by 1997 if Washington does not drastically alter its policies.

As a result, Clinton’s advisers are being forced to consider ways to scale back such bedrock Clinton campaign promises as increased public works spending. For example, senior advisers confirmed that it is “almost certain” Clinton will be unable to live up to his pledge to boost spending on roads, bridges and other public works projects by $20 billion per year. Clinton’s campaign promises, aides noted, were based on earlier forecasts of much lower deficits in future years.

“Now, arithmetically, you can’t do the Clinton campaign program,” conceded one Clinton adviser. “It is not possible to do what Clinton said he would do in the campaign.”

To cope with the worsening deficit outlook, Clinton’s advisers are considering a range of possible tax increases, such as a gasoline tax hike, despite Clinton’s campaign promise that he would not fund his new government initiatives with higher taxes on the middle class. But one senior adviser said that Clinton remains generally opposed to taxes that would adversely affect the middle class.

The harsh budget outlook means that the choices facing Clinton are more painful, making it even more difficult for Clinton and his advisers to make decisions. “There are some core beliefs from the campaign, but almost everything is still on the table,” said one adviser.

So far, Clinton has not made fundamental decisions such as whether to rule out a short-term economic stimulus package, even though that almost surely would increase the deficit in the short run. Instead, Clinton is said to be scrutinizing a detailed option memorandum prepared for him before he left Little Rock for a New Year’s vacation.

Clinton devoted nearly all of his time before Christmas to the effort to select his Cabinet and has been somewhat distracted since then by the need to fill out his White House staff and to give attention to some foreign policy issues, aides said. He met with his foreign policy advisers Tuesday in Little Rock.

“The big decision at hand for this group is to put together a package,” one top adviser said of the Thursday meeting. But it is not likely that the final choices will be made during the session. “He needs to talk these things out, and I don’t think they’ll walk out of that meeting with any final word,” the adviser said.

Along with Rubin, those expected to attend the session are Treasury Secretary-designate Lloyd Bentsen and his deputy, Roger Altman; Budget Director-designate Leon E. Panetta and his deputy, Alice Rivlin; and Laura D’Andrea Tyson, who will head the Council of Economic Advisers. Robert B. Reich, Clinton’s top economic adviser during the transition and his nominee for labor secretary, will appear at Senate confirmation hearings Thursday and will be unable to attend.

Clinton’s economic transition team apparently has done little to narrow the range of options for Clinton in preparation for Thursday’s meeting.

In another pre-inauguration effort to resolve a difficult policy issue, Clinton is expected to meet in Little Rock today with the chairmen of the nation’s Big Three auto makers and the leader of the industry’s principal union, the United Auto Workers.

The industry representatives have been critical of the proposed North American Free Trade Agreement, and while Clinton has raised concerns about certain of its provisions, his basic support for the accord has made them uneasy.

When to Watch

Live coverage of today’s Senate Commerce Committee hearing on the nomination of Democratic National Committee Chairman Ronald H. Brown to be secretary of commerce will be carried on the following channels. CNN plans what a spokesman called “extensive coverage” throughout the day. All times Pacific Standard. C-SPAN: 7-9 a.m. CNN: 7 a.m.